A chipmaker with the unpromising name Applied Micro Circuits appears about to cane Intel’s energy saving server chip business. According to the Mercury News AMC is close to getting its chip on the market and analysts claim that it could really damage Chipzilla.

Raymond James analyst Hans Mosesmann has described Applied “a significant threat" to Intel. It might only have $195 million in annual sales and 649 employees but Chipzilla will lose market share just when it does not need the competition. The sorts of chips it will lose ground on will make up most of Intel's data-centre products, which account for 20 percent of its total sales last year. Chipzilla was hoping that market would counter the slowdown in its sales of PC chips, which provide 64 percent of its revenue.

Applied Micro apparently tailored its chip designed to cloud set-ups before it really took off. Traditionally it made chips for data storage and communications equipment, such as routers and wireless base stations. This formed the basis for CEO Paramesh Gopi, who became Applied Micro's CEO who wanted to push into the cloud-server chip sector.

Applied Micro's uses low-power processors based on a design from the British firm ARM. Dubbed X-Gene the chip has enhancements to boost its performance over the standard ARM blueprint, making it the most likely immediate threat to x86. Bernstein Research analysts concluded in a recent report that "we see some risks for Intel" when the chips hit the market. Sergis Mushell of research firm Gartner agreed that Intel could be vulnerable.

Linley Gwennap, a chip expert with the Linley Group predicted that Chipzilla would be trying to throw every trick in the book at them to get them out of the market.